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Channel implications of Microsoft's online services

Microsoft is indeed making overtures in the online services arena, and many service providers aren't prepared. Some have been asleep at the wheel while others are overly mistrustful. Either way, the impetus is on you to keep on top of the changing marketplace and sell yourself to customers.

Service provider takeaway: Microsoft service providers -- whether they're suspicious of Microsoft's motives or have simply been lulled into thinking Microsoft isn't a threat -- need to pay attention to changes in the online services marketplace.

Microsoft wants your customers -- for itself. Here are three examples of Microsoft's moves to compete with the channel:

  • The move by Microsoft to host Dynamics CRM.
  • The bundling of software and services by other large providers, as in the recent announcement that Comcast will bundle services from Microsoft Exchange Server 2007, Microsoft Office Outlook 2007 and Microsoft Windows SharePoint Services 3.0 for free to its business Internet customers.
  • The hosting of Exchange Online and SharePoint Online, marketing them directly to "businesses of all sizes."

A lot of channel partners are sensitive to the fact that Microsoft seems to be encroaching on their territory. They've built their businesses based on awareness of the small and medium-sized business (SMB) environment, superior product knowledge and, most importantly, closeness to customer. The most valuable thing channel partners bring to their customers is that they cater to them in a way that vendors don't and can't. The vendor in all of this, Microsoft, has historically been seen simply as a tools provider, whereas partners work with the tools to craft a better solution that meets a customer's needs. So it's understandable that some channel partners and solution providers feel that Microsoft is doing an end-run around by them providing online services and marketing them directly to customers.

Now, surely, there are some partners who are stuck in a rut. They've been offering the same products and services for a decade, simply selling new versions as they come out. They don't invest in training or business development, and they don't respond to changes in the overall economy and business environment. They don't see the Software as a Service (SaaS) online services model on the horizon. They trust that big vendors like Microsoft will never cut off the partner community, never try to usurp the conversation with customers. In essence, they rest on their laurels, never expanding their portfolio of services such that they can continue to provide valuable, experienced advice to their customers -- being a true "partner" rather than just a middleman.

So if you happen to be in this rut, or if you're not in a rut but simply distrustful of Microsoft, I'm here to tell you that you need to grow. Keep up with what's happening in the marketplace. Are you familiar with Google's online offerings? Do you have a plan to sell them, or to dissuade your customers from migrating to them? What new products or services are you offering? How can you introduce your customers to a new product that has revenue and profit potential for both of you?

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In the future, this channel game will be a lot like a race: your future growth depends on having a breadth of products and services to offer to an increasing number of clients. Offering a variety of services to a variety of clients is the only way for channel businesses to grow. If all you do is one or two things, and a vendor starts providing the same services, it's difficult to demonstrate your value proposition to a client. However, if you employ technologically savvy people with broad expertise in many systems and products, then you are poised for success.

In light of changing dynamics in the marketplace, now is a good time to re-emphasize the value of a partner-customer relationship. Big companies such as Microsoft rarely get interaction with smaller companies -- your clients -- right. They are too slow to respond. They have far too many customers like your clients, so your clients don't feel like they get individual attention or that their issues are important enough to be heard. (Think of dealing with Ma Bell, which was skewered by Lily Tomlin in a Saturday Night Live skit with the following response after disconnecting a geographic region: "We don't care. We don't have to. We're the phone company.") Large Microsoft partners, like Dell, also get the relationship wrong, shipping broken installations and sending the vibe that your customers can handle complex jobs without you. In many cases, nothing could be further from the truth. Because there's such a gap between the vendors and end clients, those making their business in the channel only need to point out that gap and show how they can bridge it.

Your customers are probably not technology-intensive companies themselves. They aren't purchasing computers, software and connections for the love of the bleeding edge -- they're purchasing solutions that help them sustain or grow their business. They're interested in the bottom line. Saving a few bucks by taking advantage of the "interest" Microsoft has recently shown in them will prove to be a bad investment. Who's researching the good fit? Who's going to be there when the service goes down? Do your customers really want to talk to India-based call centers when they can't access a contract they need to fax somewhere immediately? Probably not, but they might not realize that's what they're getting if they buy into Microsoft's online services pitch.

So, a few words of advice: Grow. Sell yourself. Talk to your customers and show them the value of you and your company, as trusted advisors. Expand your portfolio of products and services. Educate yourself. But under no circumstances should you sit back and expect business as usual.

About the author

Jonathan Hassell is an author, consultant and speaker residing in Charlotte, N.C. Jonathan's books include RADIUS, Learning Windows Server 2003, Hardening Windows and most recently Windows Vista: Beyond the Manual.

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